Market Entry Strategy

Several factors have affected how the American auto industry now positions itself on the world market, and big changes have been made to reflect this new direction. The introduction of new technologies in vehicles, the growing market for cars in new developing markets, the impact of the industry on the environment, legislative responses and demands, as well as the increased expectations from consumers, are some of the factors. More international cars are being designed, manufactured and bought by American consumers and exported to foreign markets today than those exclusively manufactured by American companies, redefining the American auto industry, while having a positive impact on its economy. International brands accounted for 45% of total sales in the U.S. in 2013 and have now risen to 59% of the market, and continue to grow. While the amount of American cars has decreased in the local U.S. market share to international ones, the increase of foreign car production on U.S. soil has had the effect of creating new jobs for Americans both in the auto industry as well as in related new industries. The industry has seen huge growth numbers in the last few years with more growth expected.

Firstly, it is important to remember the current situation of Trader Joe’s in USA, the company has over 400 stores in 30 states and is the leader in customer service in USA. However, the company is not on the top ten supermarkets in sales category. Additionally, Trader Joe’s just operates in USA and does not have experience in other international markets. (Peterson, 2013)

The Auto Industry in the United States has flourished ever since it’s revolution in the early 1900s. “Although the blueprint for the modern automobile was perfected in Germany and France in the late 1800s, Americans dominated the industry in the first half of the twentieth century. Henry Ford innovated mass-production techniques that became standard, with Ford, General Motors and Chrysler emerging as the “Big Three” auto companies by the 1920s (Foner & Garraty 1991).” Henry Ford’s focus was to produce an automobile that could be accepted by middle class Americans. The American automobile industry is subject to global competition like any other industry. As stated earlier, the automobile was first perfected in Germany and France. In 1995, the United States and Japan made a trade agreement that provided more dealer outlets and allowed easier replacement part selling in each other’s countries (Nauss 1995). This makes auto parts and auto-replacement parts for Japanese cars easier to access in the United States and vice versa. Not only does this provide for more US jobs, but it also provides for more Japanese jobs in the auto industry (Nauss 1995)! But furthermore, it increases the global competition. “Japanese automotive manufacturers include Toyota, Honda, Daihatsu, Nissan, Suzuki, Mazda, Mitsubishi, Subaru, Isuzu, Kawasaki, Yamaha, and Mitsuoka. Cars designed in Japan have won the European Car of the Year, International Car of the Year, and World Car of the Year awards many

The competition of global car industry is intense. Competitors are from all around the world, such as from Germany and Japan. They divide the market into several segments: youth cars, family cars, business cars, luxury cars, and high fuel efficient cars. The maturity stage of the industry life cycle has been changed to fit the changing needs of customers. With the rapid development of technology, vehicles can be completely gasoline free: electric car and hydrogen car; or hybrid car: gasoline and electric fuel combination. Moreover, the purchase power of customers has been shifted from strong to being rational because of the global economic downturn. Price and fuel efficiency are the first consideration when they are buying a car.

Unlike starting a new business from scratch, many new business owners decide to buy a franchise. They get a proven business model, the buying power of a large chain and consumer awareness of a large brand.

& Wang, Y. (2012) narrated that franchising is quite similar with licensing but comprises long-term commitments whereas licensing comprises short-term commitments. Franchising is a right that a parent company gives to other business by allowing to do specific company activities such as selling product or service with the name of parent company, for example McDonalds and Starbucks Coffee. A company selling franchise receives royalty payment related to franchisee's revenue. Parent company avoids many costs and risks of opening in a host country. A company using franchise entry mode can build great market place all over the world within short time at relative low risk and

an area of particular weakness for Chinese OEMs who have relied on their foreign partners to lead the development of key component technologies. The determining factor in whether a car company can compete in the international markets is whether they have the capacity to meet local consumer as well as regulatory requirements. While Chinese firms have learned very quickly how to assemble cars and develop supply chains, they are very inexperienced at the vehicle development and synthesis process. An automobile is a complex engineered system requiring advanced technology and know-how in order to test and validate the achievement of benchmark targets in the areas of performance, fuel economy, safety and quality. It is in this area that Chinese firms are weakest. Chinese vehicles, while improving rapidly, are still not up to the world-class standards required to compete in the mature markets of the world.

Global COMPETITION in the industry: Global competition has expended in the auto industry because of an increase in global trade. This has resulted in the decline of sales in the American auto industry whilst sales in the Asian industry especially China has increased. In 2009 sales in the U.S. hit their lowest point meanwhile, it doubled in Asia generally, especially in China. (loc.gov. 2014). One of the reason for this decline in the American Auto sales is because the Japanese automakers have altered the U.S. manufacturing models and are selling it in the global market at a less expensive rate. The price and innovation is attracting a lot of customers’ to this part of the world leaving the American industry to suffer.

One of the most significant decisions to be taken in business is how to enter a new overseas market because of commitments to be made; commitment in terms of dollars to be invested, personnel for managing the international organization, and determination to stay in the market long enough to realize a return on these investments, therefore selecting the most appropriate market entry mode is vital.

Consumers are not the only ones shaping the automotive industry, by 2020 global sales in emerging markets are expected to increase from 50% to 60%. While increased sales are a good thing, the current supply and production locations may not be able to meet these sales projections. Another threat to manufacturers is the unfortunate fact that certain styles of cars tend to sell more than others in emerging markets, potentially creating an unbalanced and unstable manufacturing line for them in the future should they pursue that

A strategic alliance is defined in International business 5th edition (Rugman and Collinson) as “a business relationship in which two or more companies work together to achieve a collective advantage”

The automobile industry is one of the biggest industries worldwide. In the 21st century almost everyone around the world drives a car. Development of the global economy increasingly has led to increase the demand of automobiles globally. Automobile ownership is no longer a luxury but a necessity. Globalization has translated into increasing wealth worldwide and in turn increased demand for automobiles globally particularly in newly emerging economies. BMW Group like the rest of the Automobile manufacturers has also recognized that trend and had joined a number of other corporations and has become a transnational corporation, corporations with no border. In this paper I discuss the history of BMW Group its routes and explain when, where, why, and how it has gone global.

Making the decision on whether to go forward with a start-up verses purchasing a franchise can be a difficult one. Many factors have to be considered in order make the best sound decision for that individual. Thankfully, many resources have been established so that research can be found easier. “There are also many options as far as entrepreneurial ventures are concerned. One of the most common decisions entrepreneurs face is whether they should start up their own business or invest in a franchise. While both opportunities involve various amounts and types of risk they also hold the potential for individual benefits as well.” (Get Busy Media) Below is research that shows the

Entry of firms into a market is an important mechanism in the economy. Entrants have an equilibrating function. Firms will enter the market if the profit level is above the long-run competitive level. As a result of entry, the profit level will decrease to the long run competitive level. Entrants are also important agents of change. Firms with new ideas or production processes will enter the market. Thus these two effects of entry contribute to allocative as well as to dynamic efficiency in the market. However, several mechanisms can prevent firms from entering the market. In other words, there can be barriers to entry that harm the allocative and dynamic efficiency and are therefore detrimental for industry dynamics and economic welfare. From this perspective, it is clear that lowering barriers to entry or preventing that these barriers are created is an important issue in competition policy. All the bright-eyed founders thought that rattling off a list of differentiating features was a good thing. But it was a terrible idea. Because focusing on a single thing a singular product feature, an outstanding experience, a particular service means you’re on the right track to standing out in the marketplace. Big companies differentiate by having multiple products. They win because they can offer a single solution and minimize customers’ pain of having to work with multiple companies. Big companies usually have lots of resources and mediocre products so it makes sense

My company is comparing the factors and opportunities of entering the market in Japan. I will explore legal, political, financial, economical, and other factors. After I analyze these factors, I will decide whether or not it is a good idea to proceed to do business in Japan based on my findings of the country.